Fleet News

Insight: Salary sacrifice – why it's time for a closer look

“But it does depend on those three basic issues. For example, we’ve run a scheme with a magic circle law firm in central London over the past three years and it’s generally had a low take-up.

“This has got much to do with the fact that out of the 1,800 eligible employees, 700 are well-paid lawyers while the rest are auxiliary staff who aren’t paid as much.

“This fact, combined with public transport in London being good, has resulted in the low take-up.

“At the other end of the spectrum, we’ve established the scheme with a council in northern England where the take-up has been 40%.

“On this occasion, there isn’t such good public transport provision and it works for more employees to use the scheme.

“So it’s always important to consider the full demographics as well as the salaries of employees in the first place.”

These views are echoed by Andrew Hogsden, senior manager in the strategic fleet consultancy division of Lex Autolease.

He says: “3% to 5% represents an average take-up for a well-thought through scheme and one that is reasonably attractive to the employee.

“Take-up will depend on the employee profile of the business, where those with high numbers of part-time or relatively low paid employees may expect a lower take-up and the location of that business will also have an impact.

“Organisations achieving lower take-up tend to review the structure of their scheme to make changes that will not incur significant risk or cost.

“Provided that the scheme is explained well and proper support is in place, then employees do understand the salary and taxation implications.”

Helen Fisk, autosolutions manager at ALD, launched her company’s salary sacrifice scheme in 2011 and today it provides around 600 vehicles to 12 businesses.

She says that while vehicles’ tax emissions are undoubtedly a major consideration for clients, companies need to be aware of being too “stringent”.

Fisk explains: “Sticking points can arise if a company wants to cut the CO2 emissions of the vehicles offered to staff too low – to 100g/km, for example.

“This obviously greatly limits the number of cars that can be offered and that’s not necessarily going to attract many people into the scheme.”

Mike Belcher, head of sales at Hitachi Capital Vehicle Solutions, which launched its scheme 18 months ago, highlights the need for different departments to work together.

“We know from experience that the fleet department will want to treat the scheme as an extension to their fleet responsibilities, HR will want to treat salary sacrifice as a benefit scheme, while finance will be risk averse and want to reduce costs,” explained Belcher.

“Our role is to identify companies where we are confident all three can work together to deliver a salary sacrifice scheme that benefits both employer and employee.”

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